ADB: Philippines’ 2022 Growth Forecast Revised

The Asian Development Bank (ADB) said the growth outlook for developing countries in Asia was lowered while the forecasts for the Philippines and Southeast Asia were raised because of the “surprisingly robust” performance of select countries.

“The 2022 growth forecast for the Philippines is revised after domestic demand spurred Q3 growth above expectations,” ADB said.

“The Philippine economy has shown strong underlying growth momentum and resilience in 2022 and this is expected to continue in 2023, with GDP growth converging towards its longer-term growth rate of about 6%,” said ADB Philippines Country Director Kelly Bird.

The Philippines’ gross domestic product (GDP) rose to 7.7% in the first three quarters due to strong private consumption and investment and sustained public infrastructure spending. Sectors such as employment, tourism, production, retail sales, and public investments have also shown improvement and continue to contribute to GDP growth.

For 2023, the outlook for the Philippines was lowered to 6% from 6.3% “to accommodate monetary tightening, a sharper growth slowdown in the advanced economies, and continuing uncertainty arising from the Russian invasion in Ukraine,” ADB said.

Meanwhile, the GDP growth outlook for developing Asia was lowered to 4.2% from 4.3% due to “worsening” global headwinds such as frequent COVID-19 lockdowns in China, Russia’s invasion of Ukraine, and slower global growth, according to the ADB.

The ADB report also said that for 2022 in Southeast Asia, the GDP growth forecast was revised to a higher 5.5% for Malaysia, Thailand, Timor-Leste, Vietnam, and the Philippines after robust growth in the third quarter.

However, the ADB said growth rates are predicted to decline in 2023 due to the potential effects of inflation, rising interest rates, and constrained public finances from government spending.

The ADB said that inflation in the Philippines was revised to 5.7% from 5.3% due to higher food prices. The forecast for 2023 was kept at 4.3%.

Globally, many central banks have increased key interest rates to deal with inflation. The Philippines increased its overnight borrowing rate by a cumulative 300 basis points (bps) in 2022 to 5% as inflation rises and the peso weakens against the strong US dollar.

A slightly lower interest rate hike is expected before the year ends as the US Federal Reserve targets a slower rate increase in December.

Source: ABS-CBN